Understanding the conceptual framework
We are all shaped by our upbringings and experiences, and that includes our personal ethics. We are bound by the laws of the country in which we live. Additionally, as ACCA members and students, we are bound by ACCA’s bye-laws, regulations and the Code of Ethics and Conduct. However, the ACCA Rulebook is principles-based. Fundamental principles have been identified, and few people would disagree that these are principles that professional accountants (and others) must observe. As a result of this broad agreement, there is a clear responsibility on each ACCA member and student to safeguard the fundamental principles, and ensure that any threats to them are adequately addressed by the implementation of safeguards.
While the adequacy of such safeguards is a matter of judgement, a member who fails to recognise threats to the fundamental principles, or ignores his or her responsibility to address obvious threats, will be liable to disciplinary action.
The ACCA Rulebook sets out a framework to assist in the process of recognising threats and addressing them. By using this principles-based approach to addressing ethical dilemmas the risk is reduced of unethical actions being taken simply because they are not outlawed. In addition, ethical practices tend to be followed, not simply because members accept the Social Contract theory, but because they are better equipped to recognise threats and to satisfy themselves that they have acted ethically when addressing those threats to the fundamental principles.
The ACCA framework for solving ethical dilemmas is, in fact, the IESBA model. It consists of five steps in the form of questions to be considered when confronted with an ethical dilemma:
- What are the relevant facts?
- What are the ethical issues involved?
- Which fundamental principles are threatened?
- Do internal procedures exist that mitigate the threats?
- What are the alternative courses of action?
Finally, a member will consider whether he can face himself in the mirror after making the decision and applying any necessary safeguards.
An ethical dilemma
Each of the five steps is explored further below. Click on the down arrow to expand each section. Throughout this explanation of the framework, we will draw upon the following example:
You are the management accountant of a pharmaceuticals company. Your finance director asks you to contact the marketing director about the implications of increasing significantly the price of a generic drug you produce for thinning the blood in heart patients. The request follows a pricing agreement drawn up between the three main companies supplying these drugs to the national health service of a country. (All three companies have agreed to increase their prices.)